Commodities Roundup: Steel Momentum, Copper and Rising Oil Prices

oil oversupply OPEC John Borda/Adobe Stock

For the buyers and category managers out there, especially those of you deep in the weeds of buying and managing commodities, here’s a quick rundown of news and thoughts from particular commodity markets.

From price movements to policy decisions, our MetalMiner editors scour the landscape for what matters. This week:

Steel Momentum Slowing Down?

Many have wondered about the scope and longevity of the Section 232 investigation’s effects on the U.S. steel and aluminum industries. In the weeks following the Trump administration’s tariffs going into effect, U.S. steel prices got a boost across the board.

But is that domestic steel momentum slowing down? MetalMiner’s Irene Martinez Canorea notes that steel prices have been trading sideways thus far this month.

“The slower pace of the increases should come as no surprise as domestic steel prices have skyrocketed for the past five months,” she explained. “Also, the trade tensions around steel tariffs weakened a bit as a result of the one-month extension for the exempted countries.”

On April 30, the U.S. announced a 30-day extension for the temporary steel and aluminum tariff exemptions for the E.U., Canada and Mexico. The deadline for those tariff exemptions now falls on June 1.

LME Copper Momentum Slows

The London copper price’s gains slowed this week, as the U.S. dollar strengthened to a five-month high against the euro, according to a Reuters report.

According to the report, LME copper rose 0.3% Thursday to reach $6,844.50 per ton.

Rising Oil Prices

A number of factors have worked in tandem to send the price of oil skyrocketing, including instability in Venezuela, OPEC-led supply constraints and, of course, President Trump’s recent decision to withdraw from the 2015 Iran nuclear deal.

MetalMiner’s Stuart Burns surveyed the potential impact of rising oil prices on global growth.

“On the supply side, the combined efforts of OPEC and Russia, leaky as the agreement has been, have managed to reduce the global oil surplus in just 18 months to bring the market largely into balance,” he wrote. “As a result, oil prices have gradually risen during the period. It’s a trend most observers have been sanguine about, believing the U.S.’s tight oil producers, encouraged by rising prices, will increase output to ensure ample supply and keep a lid on oil prices getting ahead of themselves.”

But, the Iran nuclear deal decision has changed the equation.

“Lastly, Iran’s crude oil sales will be limited under the National Defense Authorization Act of 2012, as the U.S. departments of State, Energy and Treasury will allow ongoing but reduced purchases of oil from Iran, termed ‘significant reduction exceptions’ on a country-by-country basis if they demonstrate a commitment to substantially decrease oil purchases (usually at least a 20% reduction),” Burns continued. “As a result, Iran’s exports this year are likely to take a 500,000-barrel-per-day hit, from the country’s roughly 2,200,000 bpd current exports. The Telegraph speculates this could rise to 750,000 bpd next year as sanctions bite deeper.”

Aluminum Uncertainty

General uncertainty in the aluminum market continued, as prices dropped Thursday amid rising inventories and uncertainty regarding whether or not sanctions on Russian aluminum giant Rusal will be lifted, Reuters reported.

The LME aluminum price on Thursday dropped 1% to $2,293 per ton, according to the report, after on-warrant stocks certified by LME warehouses had increased 18% the previous day.

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